£40,000 Trust Fund - What to do with it?

matthew127

Hey everyone,

My brother has just turned 21 and has received £40k from his trust fund. My parents have told me that when I turn 21 next year I will get the same (with a bit more due to interest).

I am just wondering what is the best way I can use/invest this money. I'll be at university for another two years when I turn 21 so I won't need/want to touch it then. I kind of want to keep it in a high-interest account till I'm 30 and wonder how much it will be by then?

After my degree I hopefully want to be a lawyer, but I've been watching a lot of business related television shows lately (Business Inspector/Apprentice etc) and I'm extremely passionate about business (I want to be a commercial lawyer) and I wonder if I could use this £40k to start a business? I'm just extremely wary of the risks involved?

Anyway, that's my background. What is the best option for me to use this money?

Thanks very much!

kidmugsy

The answer to 82% of enquiries on this forum is ns&i Index-Linked Savings Certificates.

atush

you could ask the trustees where it is invested now. and the performace over the last 5 years. And the tax position of the investment to start.

cashbackproblems

kidmugsy wrote: »

The answer to 82% of enquiries on this forum is ns&i Index-Linked Savings Certificates.

And Cash ISA allowance!!

blinko

matthew127 wrote: »

Hey everyone,

My brother has just turned 21 and has received £40k from his trust fund. My parents have told me that when I turn 21 next year I will get the same (with a bit more due to interest).

I am just wondering what is the best way I can use/invest this money. I'll be at university for another two years when I turn 21 so I won't need/want to touch it then. I kind of want to keep it in a high-interest account till I'm 30 and wonder how much it will be by then?

After my degree I hopefully want to be a lawyer, but I've been watching a lot of business related television shows lately (Business Inspector/Apprentice etc) and I'm extremely passionate about business (I want to be a commercial lawyer) and I wonder if I could use this £40k to start a business? I'm just extremely wary of the risks involved?

Anyway, that's my background. What is the best option for me to use this money?

Thanks very much!

you technically dont need any money to start a business all depends. just because you have 40k isn't areason to spend it.

If you do become a lawyer straight away thats your opportunity there to start your own business by offering legal serices.

Or you could go down the usual route of buying and selling business

gadgetmind

matthew127 wrote: »

I kind of want to keep it in a high-interest account till I'm 30 and wonder how much it will be by then?

With all due respect, if you can't do a compound interest calculation, then perhaps you need to hold off on starting a business!

There are two ways to do it. If you won't be adding/subtracting money, and the interest rate is fixed, then any calculator that will handle powers will do it for you. Just raise the interest rate expressed as a factor to the power of the number of periods.

For example, if you can earn 4% interest per year, and will hold for 9 years then -

£30000 x (1.04^9) = £42700.

This works because each year you will have 4% more, so you multiply by 1.04, and all those multiplies can be expressed as a single power function. Now, before you get excited, remember inflation. If this runs at 3%, then the value of your money will be reduced by 1/(1.03^9), so that £42700 would be worth £32725 in today's money.

What this shows you is that compound interest is great, and that beating inflation is the name of the game.

(Note that the above isn't totally exact as interest tends be applied daily, and inflation is far from fixed, but you get the idea.)

The other way to do these calculations is with a spreadsheet, with a column per year (or month, or whatever) and you can then add and subtract money, apply varying rates of interest, and then carry forward what's left to the next column.

Such things are often called cash flow forecasts, and again, they are a staple of business that you need to be very familiar with.

I started my own business during my final year at University, and had to keep records, balance books, do VAT returns, and even do a fairly hairy tax return.

The learning curve was steep but it was all immensely worthwhile.

MoneySaverLog

matthew127 wrote: »

Hey everyone,

My brother has just turned 21 and has received £40k from his trust fund. My parents have told me that when I turn 21 next year I will get the same (with a bit more due to interest).

How do you know this, are the investments capital secured or are they in equities, if the latter share prices could well go down and you could end up with less than £40k.